Get rid of the {}
in your $command definition. [ScriptBlock]::Create() expects some text in which it will wrap in a scriptblock. You can also simplify this:
$SetupPath = "C:\Test Installs"
# Enclose the path to setup.exe in quotes
$Setup = "`"$SetupPath\setup.exe`""
$command = "SetupProcess = Start-process `"$Setup`" -ArgumentList `"/config config.xml`" -Wait -PassThru"